Despite the evidence for a core phonological deficit in dyslexia, the nature of this deficit at the level of the phonological representation is not well understood. In this study, the auditory word gating paradigm was used to examine the quality of the underlying phonological representations in dyslexic and average readers. Although the dyslexic children showed age-related nonword and rapid naming deficits, they did not differ from the age-matched controls in the amount of acoustic–phonetic input required to identify sets of words that varied in word frequency and phonological neighborhood density. These results indicate that input phonological processing, as tapped by the gating task, is normal in this group of dyslexic children, whereas their deficits on the RAN tasks suggest that there are problems with phonological retrieval. The implications of these results are considered in relation to the phonological representations hypothesis of dyslexia; the evidence suggests that what is impaired in dyslexia are the retrieval processes that operate on phonological representations.